The Highest Offer Isn't Always the Best Offer When Selling a Business
When a business owner receives multiple offers, it's natural to focus on the highest number.
But one thing I've learned is that the highest offer isn't always the best offer.
When I'm reviewing an offer with a seller, price is obviously important. But it's only one part of the deal.
I also want to understand how the buyer plans to pay for the business. How much cash are they putting down? Are they relying on SBA or other financing? Do they have the liquidity to complete the transaction? Does their experience make sense for the business?
Then I look at the terms.
How long is the due diligence period? What contingencies are included? Is the buyer asking for seller financing? What's the proposed closing timeline? Are there conditions that could make the transaction more difficult to complete?
All of those factors matter.
Price vs. Certainty of Closing
A buyer can offer a great price on paper, but that number doesn't mean much if the transaction never makes it to the closing table.
That's why I look at both the economics of an offer and the likelihood that the buyer can actually complete the transaction.
Sometimes a slightly lower offer from a well-qualified buyer with strong financing, reasonable contingencies, and a clear path to closing can be a better offer for the seller.
That doesn't mean sellers should automatically accept less.
It means every part of the offer needs to be considered.
Looking Beyond the Purchase Price
When I review offers with sellers, I want them to understand exactly what they're agreeing to and where I see potential risks.
Two offers with similar purchase prices can look very different once you consider financing, seller notes, contingencies, due diligence, timing, and the buyer's qualifications.
My job isn't just to help a seller get the highest price.
It's to help them evaluate the entire offer and understand the likelihood of actually getting to the closing table.
That's one lesson I keep coming back to.